In common terms, "validating the business model" can be as simple as other people going after the same idea as you. While that doesn't necessarily make it a profitable idea, it does make it feel more like an obvious idea whose time has come.

Even in the case of copycats, if the idea has legs enough to spawn copycats, that may also speak to its viability. Groupon is a great example of this. Despite Groupon's own troubles, it has spawned a number of copycats that appear to be doing quite well.

In short, validation doesn't necessarily mean profits. It could mean high signup rates with the later potential to monetize (ala Twitter), or it could mean copycats, or it could mean (of course) profits.